India's electronics renaissance

Deepak Loomba, an entrepreneur based inGandhinagar, is dreaming big. His venture, De Core Nanosemiconductors, alreadyhas one of the largest operational semiconductor manufacturing sites in South Asia and employs about 70 people. But this is justthe beginning, he says. He reckons the growing stress on energy efficiency in India means alarge and expanding domestic market for his venture. "India will beone of the largest consumers of LEDs in the world," says Loomba, referring tolight emitting diodes, the latest in lighting.

 

B. Visweswaran, a 37-year-old Chennai-basedentrepreneur is aiming high as well. A former Intel employee, his two-year-oldstartup Wysene provides solutions that streamline the power usage of industriesin India.The firm's product tracks power drawn from the state grid and from newersources such as solar panels and windmills. The companies then can tweak theirproduction cycle to save power and costs. "Industries could shiftpower-intensive processes to off-peak time when electricity is cheaper andperhaps more regular," says Visweswaran, who has also worked out a product forhomes.

The Big Picture The Indian electronics industry is on the fast track… A huge domestic, import-dependent market is giving a fi llip to manufacturing Telecom, health care, utilities are leading this surge From electronics design, India could also graduate to large-scale manufacturing … but there are roadblocks Infrastructure has improved, but remains woefully short of global standards Electronics fi rms find fi nancing hard to nail down Most electronics firms are still sub-scale

Loomba and Visweswaran have many others forcompany. The exploding electronics market in India is catalysing theestablishment of a range of diverse startups. According to several independentestimates, there are some 1,000 companies now operating in this market,scattered around the country. India'sconsumption of electronics, says a report commissioned by the Ministry ofCommunications and Information Technology, could grow almost tenfold in size inthe next decade to a staggering $400 billion.

Today, electronics account for the secondhighest foreign exchange outgo after petroleum and its products, in India's importbill. This opens up umpteen opportunities for local designers andmanufacturers. It is estimated that a fifth of India's Rs 927,969 crore tradedeficit is from electronics.

In telecom alone, analysts say India requiresimports of up to $50 billion yearly, with phone service firms spending half oftheir revenues on equipment imports. For example, in the $6-billion wirelinetelecom market, only half of the products are made locally. Or consider thewireless infrastructure: imports account for some 60 per cent of the $8-10billion equipment procured annually.

Indian enterprises, including some of thebiggest names in the business, have previously made unsuccessful attempts inelectronics manufacturing but were stymied by a dormant local market and anunhelpful bureaucracy. Bharti, the Tatas (with Telco) and the Mahindras, haveall made forays. But things appear different now, says the industry, with abooming domestic market. Beside cellphones, India is a leading market fortelevisions, VCD/CD players and other consumer electronic products. Thisopportunity could also generate four to five million jobs, many of them bluecollar assembly and testing roles, according to the Indian SemiconductorAssociation, or ISA, the industry body.

The domestic market straddles diverseindustries such as telecom, power, health care, defence and even entertainment.The evolving domestic electronics industry combines India's strength in software andnewer skills in computer chip design along with some skills in hardware andsemiconductor manufacturing.

The more the merrier
The people starting up, too, are diverse.For example, in a suburb in northern Bangalore,Sankara Reddy, who worked for 15 years at the Indian Institute of Sciencebefore turning entrepreneur, has started his latest venture, called Terminus Circuits.With a small team of just nine people now, he plans to develop a solution toprovide wireless charging for consumer electronic products. "We want to use ourintellectual property to build wirelessrouter-like charging stations," saysReddy.

At the other end, three 30-somethings,Arijit Datta, Soumen Basak and Shamik Datta, have co-founded DiSipher Design.The trio is targeting educational institutes with its iPintentio, a softwareplatform that helps reduce the complexity of chip design for students andprofessionals. "A microchip is the culmination of a complex, and often, longset of processes," says Datta. DiSipher's founders think they have a winningidea at hand as India'schip designing and eventually manufacturing capabilities expand.

The potential in the electronics industryhas also attracted the veterans of the information technology industry. Forexample, Anant Koppar, 51, an early employee of MphasiS (acquired by EDS inJune 2006 for Rs 1,800 crore) and prior to that of Kshema Technologies(acquired by Mphasis for $21 million or Rs 94.5 crore), is now making a freshbet. His latest venture, called KTwo Technology Solutions, wants to lean on India's expertise in electronics - strong indesign and evolving prowess in manufacturing - to devise low-cost products for India's ruralmillions.

KTwo provides solutions to primary healthcentres to run basic diagnostic tests (for malaria, dengue and chikungunya) andmonitor basic patient metrics such as blood pressure, heart rhythms and body temperature.Its products have been piloted in parts of Karnataka for the past 18 months. "India has a head start over China inback-end design," says Koppar.

Multinational companies, too, have woken upto the potential of India.Huawei, a Chinese telecom equipment giant, has announced a $2-billioninvestment in India."India is a very importantmarket," says Max Yang, its Managing Director in India. Huawei, whose Bangalore engineering centre is its largest outside China, hasleading edge technology in mind. "Huawei will invest in developing the Indianmarket in terms of adopting the latest technologies such as 3G and wiMAX anddeveloping Indiaas a hub for training HR and sourcing," Max says.

Boutiques such as Shanghai-based Longcheerand ON Semiconductor are also betting big on India. Longcheer, which hasdesigned mobiles for firms such as China Mobile, Haier and Lenovo, has set up a30-people design centre at Noida, near capital New Delhi, to design phones for the localmarket. "India is theworld's second-largest mobile phone market and is rapidly expanding," says ManuNagar, CEO of Longcheer India."We will cater to the design needs of domestic brands. Users are not satisfiedwith generic handsets and features that are available with global brands today."

On Semiconductor, a Phoenix, Arizona-basedsemiconductor supplier, recently opened its India centre and wants to join thelikes of Huawei and Longcheer in tapping the opportunity here. It will focus onmanufacturers of UPS and inverters, energy meters and LED lighting.